“Looking at the current trends in appellate and Supreme Court campaign finance laws, is there anything in HR. 1826 that may be subject to constitutional scrutiny?”
Question 2 Response
“Aside from public financing, could pay-to-play laws and bans on contributions from lobbyists and federal contractors as some states have done help to reduce perceived corruption of House members? Would such bans be constitutional on a federal level?”
Question 7 Response
or download: pdf Question 2; pdf Question 7
September 11, 2009
To:
The Honorable Robert A. Brady, Chairman
The Honorable Daniel E. Lungren, Ranking Minority Member
Committee on House Administration, U.S. House of Representatives
From:
Monica Youn and Ciara Torres-Spelliscy
Brennan Center for Justice at NYU School of Law
Re: H.R. 1826: Response to Questions to Arn Pearson, dated August 13, 2009/ Question Number 2
“Looking at the current trends in appellate and Supreme Court campaign finance laws, is there anything in HR. 1826 that may be subject to constitutional scrutiny?”
Brennan Center Response:
Public financing programs such as H.R. 1826, which provide public funding to candidates who voluntarily agree to certain restrictions, have consistently been praised and upheld by the United States Supreme Court and several federal circuit courts of appeals. See, e.g., Buckley v. Valeo, 424 U.S. 1 (1976) (per curiam) (upholding the presidential public financing system under Federal Election Campaign Act (“FECA”)); Daggett v. Comm’n on Governmental Ethics & Election Practices, 205 F.3d 445 (1st Cir. 2000) (upholding Maine’s Clean Election Act); Rosenstiel v. Rodriguez, 101 F.3d 1544, 1552 (8th Cir. 1996) (upholding Minnesota’s public funding for elections); see also Duke v. Leake, 524 F.3d 427 (4th Cir. 2008) (upholding North Carolina’s judicial public financing system). These courts have concluded that public financing furthers First Amendment values and thus advances sufficiently important and significant state interests. See Buckley, 424 U.S. at 92–107.
Public financing systems have typically been subject to constitutional challenge on two constitutional grounds: (1) whether the program chills free speech rights under the First Amendment or (2) whether the program implicates equal protection rights under the Fourteenth Amendment. These grounds for challenges are usually unsuccessful, and public financing systems have traditionally been upheld by most courts. However, this is not universally true – in two cases, courts have enjoined public financing systems that feature matching funds “triggered” by opposing or independent expenditures and/or a distinction between the treatment of major and minor party candidates. See Day v. Holahan, 34 F.3d 1356 (enjoining provision of Minnesota’s campaign finance statute that increased candidate’s expenditure limit and public subsidies based on amounts of independent expenditures); Green Party of Connecticut v. Garfield, 3:06 cv 1030 (SRU) (Aug. 27, 2009) (enjoining Connecticut’s Citizens Election Program). However, the public financing system in H.R. 1826 exhibits neither of these features. Additionally, the pending case of Citizens United v. FEC, No. 08–205 (U.S. 2009), which is under submission to the Supreme Court, does not bear on public financing systems such as that in H.R. 1826. Accordingly, nothing in current trends in appellate and Supreme Court campaign finance law casts doubt upon the constitutionality of H.R. 1826.
Public Financing Systems Such as FENA Enhance, Rather Than Inhibit, the Exercise of First Amendment Freedoms
Modern campaign finance jurisprudence springs from the seminal case of Buckley v. Valeo, which reviewed the constitutionality of contribution limits, expenditure limits and public financing. In Buckley, the U.S. Supreme Court explained that a public funding system aims, “not to abridge, restrict, or censor speech, but rather to use public money to facilitate and enlarge public discussion and participation in the electoral process, goals vital to a self-governing people.” Id. at 92–93. The Court further noted that:
the central purpose of the Speech and Press Clauses was to assure a society in which “uninhibited, robust, and wide-open” public debate concerning matters of public interest would thrive, for only in such a society can a healthy representative democracy flourish. Legislation to enhance these First Amendment values is the rule, not the exception. Our statute books are replete with laws providing financial assistance to the exercise of free speech.
Id. at 93 n.127 (citations omitted).
Public financing promotes “uninhibited, robust, and wide-open public debate” not only through direct subsidies for speech but also through more indirect means. A full public funding system restructures the incentives between candidates hungry for cash and donors hungry for influence. In this sense, then, a public financing system serves the same interest as contribution limits, i.e., combating “both the actual corruption threatened by large financial contributions and the eroding of public confidence in the electoral process through the appearance of corruption.” McConnell v. FEC, 540 U.S. 93, 136 (2003) (internal quotation omitted). “Because the electoral process is the very ‘means through which a free society democratically translates political speech into concrete governmental action,’ . . . measures aimed at protecting the integrity of the process . . . tangibly benefit public participation in political debate.” Id. at 137 (quoting Nixon v. Shrink Mo. Gov’t PAC, 528 U.S. 377, 401 (2000) (Breyer, J., concurring)).
Public funding systems also foster First Amendment interests by freeing candidates from the rigors of fundraising and permitting them to devote time to communication and debate. See Buckley, 424 U.S. at 96 (“Congress properly regarded public financing as an appropriate means of relieving . . . candidates from the rigors of soliciting private contributions.”) (internal quotation omitted); Rosenstiel, 101 F.3d at 1553 (recognizing Minnesota’s compelling interest in reducing “the time candidates spend raising campaign contributions, thereby increasing the time available for discussion of the issues and campaigning”); Vote Choice, Inc. v. DiStefano, 4 F.3d 26, 39 (1st Cir. 1993) (upholding Rhode Island public financing law because such programs “‘facilitate communication by candidates with the electorate’ [and] free candidates from the pressures of fundraising”) (quoting Buckley, 424 U.S. at 91).
The Roberts Supreme Court has reaffirmed Buckley’s support of public financing systems. In Davis v. FEC, 128 S.Ct. 2759 (2008), the Court reaffirmed Buckley’s strong approval of public financing systems, reiterating the government’s ability to condition acceptance of public funds on a requirement that candidates abide by specific expenditure limits,. The Davis Court noted that:
In Buckley, we held that Congress “may engage in public financing of election campaigns and may condition acceptance of public funds on an agreement by the candidate to abide by specified expenditure limitations” even though we found an independent limit on overall campaign expenditures to be unconstitutional. 424 U.S., at 57, n. 65; see id., at 54–58.
Davis v. FEC, 128 S.Ct. 2759, 2772 (2008) (affirming Buckley’s holdings on voluntary public financing).
Because public funding programs include a voluntary agreement by participating candidates to abide by spending limits and to forego (or limit) private contributions, such programs are subject to attack on the ground that they violate the First Amendment rights of contributors as well as candidates, but this claim has so far been found to be without merit. Republican Nat’l Comm. v. FEC, 487 F. Supp. 280, 286 (S.D.N.Y.) (three-judge court) (“[S]ince the candidate has a legitimate choice whether to accept public funding and forego private contributions, the supporters may not complain that the government has deprived them of the right to contribute.”), aff’d, 445 U.S. 955 (1980).
FENA, like the presidential public financing program and those in Maine, Arizona and North Carolina, furthers First Amendment values by seeking to enlarge public discussion, prevent corruption and its appearance, and open elective offices to a broader pool of candidates.
HR 1826 Avoids Challenges to “Trigger” Provisions Based on Davis v. FEC
Because of the careful drafting of H.R. 1826, this bill avoids one of the most contested questions in campaign finance law: the constitutionality of trigger matching funds. Trigger matching funds, which are also known as “rescue funds” or “fair fight funds” in some jurisdictions, are additional public funds that are made available to a publicly funded candidate facing high spending from either a privately-funded opponent or from an independent spender. The additional public grants are “triggered” by spending above a set monetary threshold by an opponent or an independent spender.
Buckley and its follow-up case Republican Nat’l Comm. v. FEC, did not address the constitutionality of trigger matching funds because FECA does not contain this type of funding mechanism. For years, the federal courts held trigger matching funds to be presumptively constitutional. Daggett v. Comm’n on Governmental Ethics & Election Practices, 205 F.3d 445, 465 (1st Cir. 2000) (holding public funding system’s matching fund provision based on independent expenditures did not burden speakers’ First Amendment rights); Jackson v. Leake, 476 F. Supp. 2d 515, 529 (E.D.N.C. 2006), aff’d sub nom., Duke v. Leake, 524 F.3d 427 (4th Cir. 2008) (rejecting argument that trigger provisions in public campaign financing scheme impairs speaker’s First Amendment speech rights); Ass’n of Am. Physicians & Surgeons v. Brewer, 363 F. Supp. 2d 1197, 1199–1203 (D. Ariz. 2005) (rejecting plaintiffs’ First Amendment challenge to public financing scheme’s matching fund provisions and adopting reasoning of Daggett); Wilkinson v. Jones, 876 F. Supp. 916, 927–28 (W.D. Ky. 1995) (rejecting constitutional challenge to trigger provision that increased participating candidate’s expenditure limit based on the expenditures of privately-financed candidates).
The one outlier to this reading of the constitutionality of trigger matching funds was the Eighth Circuit’s decision in Day v. Holahan, 34 F.3d 1356, 1359–60 (8th Cir. 1994), which found that a trigger which matched independent spending in Minnesota was unconstitutional. The Eighth Circuit itself abandoned the reasoning of Day in a later case by upholding opponent trigger matching funds. Rosenstiel v. Rodriguez, 101 F.3d 1544, 1551–2 (8th Cir. 1996); see also Daggett, 205 F.3d at 464 n.25 (noting that the “continuing vitality of Day is open to question”); Leake, 524 F.3d at 438 (“the Day decision appears to be an anomaly even within the Eighth Circuit, as demonstrated by that court’s later decision in Rosenstiel”).
At least one court has opined that the presumed constitutionality of trigger matching funds was called into question when the Supreme Court mentioned Day favorably in dicta in Davis v. FEC, 128 S. Ct. 2759, 2772 (2008), a case which struck down the Millionaire’s Amendment to the Bipartisan Campaign Reform Act (BCRA). Although Davis is about contribution limits in privately funded elections, and not about public financing, a federal district court in Connecticut recently stated that “[t]here is no question that the Supreme Court’s decision in Davis has breathed new life into the legal reasoning of Day.” Green Party of Connecticut v. Garfield, 3:06 cv 1030 (SRU) slip op. at 134–36 (Aug. 27, 2009) (relying on Davis to strike down Connecticut’s trigger matching funds). Presently, the question of the constitutionality of trigger matching funds is an open issue in on-going federal cases in Arizona and the Second Circuit, and this question may ultimately reach the Supreme Court.[1]
However, H.R.1826 has avoided this debated constitutional issue because as presently drafted, FENA does not have trigger matching funds. Instead, participating candidates retain the ability to gather small private contributions throughout the election cycle so that they can respond to high spending in a race as necessary.
HR 1826’s Equal Treatment of Major and Minor Parties
As mentioned above, a federal court in Connecticut recently enjoined that state’s public financing system, in part, because the Connecticut system imposed different qualification requirements on major and minor party candidates, requiring an additional showing of electoral support from minor party and independent candidates before they were given the same public funding as major party candidates. However, this holding does not bear upon FENA, since the proposed congressional public financing system makes no distinction between candidates from major and minor parties.
Connecticut implemented a popular support-based system that allowed non-major party candidates to receive public campaign funding upon demonstrating a broad base of support. Under this system, non-major party candidates could receive one-third, two-thirds, or full funding in a general election by winning over 10, 15 or 20 percent of the vote, respectively, in the previous election or by collecting an equivalent number of signatures. Furthermore, non-major party candidates could be reimbursed after an election if their popular support increased.
The Connecticut district court held that this differential treatment of major and minor party candidates violated the Fourteenth Amendment’s guarantee of equal protection. As the judge in the case explained, “[t]he government . . . in creating such a public campaign financing scheme to combat the influence and appearance of corruption in politics, may not simultaneously disadvantage minor party candidates’ political opportunity.” Green Party of Connecticut v. Garfield, 3:06 cv 1030 (SRU) slip op. at 68 (Aug. 27, 2009). By contrast, H.R. 1826 avoids this equal protection issue by making no distinction between candidates from major and minor parties.
Conclusion
The public financing system for Congressional elections created by H.R. 1826 was carefully structured to maximize its ability to survive judicial scrutiny. Like all public financing systems it enhances First Amendment values and does so while providing equal access to public funding from candidates of all stripes. For these reasons, the Brennan Center urges the Committee to approve H.R. 1826.
[1] The Supreme Court last year declined to hear a case in which the Fourth Circuit had upheld the constitutionality of North Carolina’s judicial public financing system, which included triggered matching funds in high-spending races or those with independent expenditures. See North Carolina Right to Life, Inc. v. Leake, 524 F.3d 427, 437 (4th Cir. 2008), cert. denied by Duke v. Leake, 129 S.Ct. 490 (Nov. 3, 2008).
Re: H.R. 1826: Response to Questions to Arn Pearson, dated August 13, 2009/ Question Number 7
“Aside from public financing, could pay-to-play laws and bans on contributions from lobbyists and federal contractors as some states have done help to reduce perceived corruption of House members? Would such bans be constitutional on a federal level?”
Brennan Center Response:
In advancing FENA’s goal of combating corruption and the appearance of corruption among House members, pay-to-play laws could be considered a complement to, but not a substitute for, Congressional public financing. While the nomenclature varies, contribution restrictions that apply to lobbyists, government contractors or highly regulated industries are often known as “pay-to-play” restrictions. They are referred to as “pay-to-play” regulations because they seek to prevent deals whereby contributors “pay” an official for the opportunity to “play” with government business or in a government-regulated arena. Contributions from government contractors and highly regulated industries, who seek lucrative contracts, licenses and other beneficial treatment from the government, often raise the appearance of corruption. Similarly, contributions made by lobbyists, who meet directly with public officials about legislation or administrative action affecting the lobbyists’ clients at the same time they are delivering checks to candidates, raise at least the appearance of corruption. Accordingly, many states have enacted regulations or bans on contributions by state contractors, by lobbyists and their clients, and by highly regulated industries.[1] Courts throughout the nation have upheld such pay-to-play regulations, recognizing that political contributions by government contractors, by lobbyists and their clients, and by highly regulated industries pose severe risks of corruption.
However, pay-to-play laws cannot be considered a substitute for public financing systems. Although pay-to-play laws may lessen the potential for corruption by specified groups, such as lobbyists, state contractors, and highly regulated industries, pay-to-play laws do nothing to combat elected officials’ dependence on large sums of private money, and on the corruption and appearance of corruption inherent in such a “dialing for dollars” system.
Pay-to-Play Laws Are Usually Held Constitutional
The Supreme Court recognized over fifty years ago that lobbyists can be subject to special regulations because of their influence on the legislative process. U.S. v. Harriss, 347 U.S. 612 (1954) (upholding disclosure requirements for federal lobbyists). The Court described modern legislative process in the following way:
Present-day legislative complexities are such that individual members of Congress cannot be expected to explore the myriad pressures to which they are regularly subjected. Yet full realization of the American ideal of government by elected representatives depends to no small extent on their ability to properly evaluate such pressures. Otherwise the voices of the people may all too easily be drowned out by the voice of special interest groups seeking favored treatment while masquerading as proponents of the public weal. This is the evil the [federal] Lobbying Act was designed to prevent.
U.S. v. Harriss, 347 U.S. 612, 625 (1954) (emphasis added). The Court concluded that Congress could require disclosures from federal lobbyists in part because Congress had the “power of self-protection.” Id. State contractors and highly regulated industries can also be subject to special restrictions because of the conflicts of interest presented when they seek lucrative contracts or concessions from the very politicians that they have helped to elect. Earle Asphalt Co., A-37–08 (NJ 2009) (upholding NJ’s state contractor pay-to-play laws); Ognibene v. Parkes, No. 08 Civ. 1335 (S.D.N.Y. 2009) (upholding NYC’s city contractor pay-to-play laws); Green Party of Conn. v. Garfield, 590 F. Supp. 2d 288 (D. Conn. 2008) (upholding CT’s state contractor pay-to-play laws); Casino Ass’n of La. v. State, 820 So. 2d 494, 509 (La. 2002) (upholding ban on contributions from riverboat and land-based casinos to all candidates and all PACs that support or oppose a candidate); Soto v. State, 565 A.2d 1088, 1098 (N.J. Super. Ct. App. Div. 1989) (upholding ban on political contributions from casino employees to any candidate or political committee); Schiller Park Colonial Inn, Inc. v. Berz, 349 N.E.2d 61, 67–68 (Ill. 1976) (upholding ban on contributions from members of liquor industry to any candidate or political party). Since the livelihood of both lobbyists, government contractors, and highly regulated industries depends in large part on their ability to successfully influence governmental officials, governmental efforts to curb both the perception and reality of undue influence can appropriately be focused on these groups.
Whether a court will uphold a particular “pay-to-play” ban or regulation as constitutional depends upon the reach of the law and the grounds for imposing it. While narrow pay-to-play regulations are generally upheld, see, e.g., Blount v. SEC, 61 F.3d 938, 944–48 (D.C. Cir. 1995) (upholding constitutionality of SEC regulations prohibiting municipal finance underwriters from making campaign contributions over $250 to officials who award government underwriting contracts), court decisions on broader pay-to-play regulations have been mixed, depending on the courts’ judgments about whether the broader restrictions were necessary to address the potential for corruption.[2] Accordingly, pay-to-play laws, which address only a subset of private donors, do not fundamentally alter the incentives that cause elected officials to become beholden to private donors.
Play-to-Play Laws Are Not a Substitute for Public Financing
Public financing addresses corruption in a different way by giving candidates an alternative to the private campaign financing system. In most public financing systems, private fund raising is diminished or nearly eliminated. Thus, candidates do not face the “dialing for dollars” pressures that cause them to become obligated to major donors. On the other hand, pay-to-play restrictions typically encourage candidates to seek funding from other sources with fewer direct conflicts of interest; but the candidates still rely on private funds.
Pay-to-play restrictions and public financing can be complementary because on the one hand, the pay-to-play restrictions eliminate some of the most potentially corrupting money from politics, meanwhile public financing can help fill the candidate’s funding gap with clean public money. Thus, pay-to-play rules can incentivize candidates to participate in the public financing system. For example, the State of Connecticut, in the wake of multiple corruption scandals involving the governor and other elected officials, enacted a comprehensive campaign finance reform act that encompassed both pay-to-play bans on state contractors, lobbyists, and their clients, as well as a full public financing system for state elected officials. A federal court upheld the pay-to-play bans against constitutional challenge, Green Party of Conn. v. Garfield, 590 F. Supp. 2d 288 (D. Conn. 2008). Although the court struck down the public financing system because it considered the Act’s treatment of minor party candidates and its triggered matching funds to be constitutionally infirm, the court went out of its way to explain that it did not mean to cast doubt upon the constitutionality of public financing systems in general, nor on the motives of the State of Connecticut in enacting broad prophylactic reforms.
Conclusion
The Brennan Center suggests that adopting narrowly tailored pay-to-play restrictions for Congressional lobbyists and federal contractors would be constitutional and could function as a complement to the public financing system contemplated by H.R. 1826. However, pay-to-play reforms should not be considered to be an adequate substitute for the capacity of public financing to lessen corruption and the appearance of corruption.
[1] See Craig Holman, Public Citizen, “Pay to Play” Restrictions on Campaign Contributions from Government Contractors 2008 – 2009 (2009), http://www.cleanupwashington.org/documents/paytoplay2009.pdf (listing nine states with contractor pay-to-play laws).
[2] See N.C. Right to Life, Inc. v. Bartlett, 168 F.3d 705, 718 (4th Cir. 1999) (upholding sessional ban on lobbyist’s contributions as constitutional); Blount v. Sec. Exch. Comm’n, 61 F.3d 938, 946–47 (D.C. Cir. 1995) (upholding constitutionality of SEC regulations that prohibit municipal finance underwriters from making campaign contributions over $250 to officeholders who award government underwriting contracts); Wachsman v. City of Dallas, 704 F.2d 160, 173 (5th Cir. 1983) (upholding City charter provision prohibiting contributions by City employees to City council elections); Green Party of Conn. v. Garfield, 590 F. Supp. 2d 288 (D. Conn. 2008) (upholding lobbyists’ and state contractors’ contribution and solicitation bans); Inst. of Governmental Advocates v. Fair Political Practices Comm’n, 164 F. Supp. 2d 1183, 1192 (E.D. Cal. 2001) (upholding ban on contributions from lobbyists to offices lobbied); Casino Ass’n of La. v. State, 820 So. 2d 494, 509 (La. 2002) (upholding ban on contributions from riverboat and land-based casinos to all candidates and all PACs that support or oppose a candidate); State v. Alaska Civil Liberties Union, 978 P.2d 597, 619–20 (Ala. 1999) (upholding a restriction on lobbyists’ giving contributions to candidates outside of their own district); Kimbell v. Hooper, 164 Vt. 80, 665 A.2d 44, 48 (1995) (upholding sessional ban on lobbyist’s contributions); Gwinn v. State Ethics Comm’n, 426 S.E.2d 890, 893 (Ga. 1993) (upholding ban on contributions by insurance companies to candidates for Commissioner of Insurance); Soto v. State, 565 A.2d 1088, 1098 (N.J. Super. Ct. App. Div. 1989) (upholding ban on political contributions from casino employees to any candidate or political committee); Schiller Park Colonial Inn, Inc. v. Berz, 349 N.E.2d 61, 67–68 (Ill. 1976) (upholding ban on contributions from members of liquor industry to any candidate or political party). But see Dallman v. Ritter, No. 09CV1188 (D. Colo. July 17, 2009) (enjoining law which prohibited holders of state contracts over $100,000 that were not competitively bid from making contributions to candidates for any elected office in the state or in connection with any ballot issue); DePaul v. Commonwealth, 969 A.2d 536 (Pa. 2009) (finding that complete ban on political contributions by individuals affiliated with licensed gaming violated the Pennsylvania Constitution’s protection of freedom of expression and association); Ark. Right to Life State Political Action Comm. v. Butler, 29 F. Supp. 2d 540, 553 (E.D. Ark. 1998) (invalidating ban on fundraising during any legislative session as well as thirty days before and after regular sessions); Shrink Mo. Gov’t PAC v. Maupin, 922 F. Supp. 1413, 1419 (E.D. Mo. 1996) (Maupin II) (invalidating a session ban that lasted 4 ½ months, because cutting off funds for 1/3 of an election year prevented candidates from amassing the resources necessary for effective advocacy); State v. Dodd, 561 So. 2d 263, 264 (Fla. 1990) (invalidating a session ban that applied to both regular and special sessions, which may be called at any time, because it imposed a “potentially . . . limitless” period of time during which money could not be raised); Fair Political Practices Comm’n v. Superior Ct., 25 Cal. 3d 33, 45 (1979) (noting the importance of ridding the political system of corruption but nonetheless striking down as overbroad a state law that banned all contributions from lobbyists).